Question

Hospitals and universities are very expensive to run not only due to the capital equipment that is required for each but also due to the personnel such as specialized medical doctors and researchers. The cost of these types of institutions is an example of _____.

Answer 1

An entry barrier. This is because the cost enhances barrier to entry.

Step-by-step explanation:

An entry barrier refers to a fixed cost that a new entrant to an industry or market must incur before it enters the market or the industry, but the current firms in the market does have to incur the fixed cost again because they had already incurred it before they too gained entry into the industry.

An entry barrier can also be referred to as anything that do not allow new firms to enter an industry when their entry will produce social benefit.

Examples of these fixed costs that form entry barriers include building cost, cost, technological cost, and among others. Apart from the fixed cost, other sources of entry barrier include patents and copyrights, government restrictions, resource ownership, long period of specialized training, and among others.

Therefore, the types of institution cost mentioned in the question is an example of entry barrier. This is because the costs enhance barrier to entry.